Fed proposes reserve and capital rules for stablecoin issuers

The Federal Reserve proposed new regulations on Thursday mandating that payment stablecoin issuers maintain full reserves in short-duration government debt or comparable high-liquidity instruments. The Block reports that the package also establishes uniform capital standards to mitigate risk. Under the plan, banks supervised by the board may apply for authorization to issue these digital tokens. These provisions execute the GENIUS Act, signed into law by President Donald Trump last year.

The legislation establishes a federal framework for stablecoins, requiring full support by U.S. dollars or similarly liquid holdings and annual audits. An initial implementation deadline is set for July 2026, while the GENIUS Act reaches its effective date in January 2027.

Federal Reserve Governor Michael Barr stated he supported the latest proposal but expressed worry regarding anti-money laundering oversight. He cautioned against a criterion "that would prevent the Board from undertaking a supervisory or enforcement action related to an anti-money laundering deficiency unless the issue identified is a 'significant or systemic' issue." Barr added, "I am concerned that the 'significant or systemic' standard may have unknown effects on the Board's ability to effectively substantiate that an institution establishes and maintains compliant programs."